Constellation Brands Considers Liquidating Wine Portfolio

New York based beverage giant, Constellation Brands, made headlines again this week when it reportedly hired Goldman Sachs to help with the sale of its U.S. wine portfolio.

Worth an estimated $40 billion, Constellation Brands hopes to raise $3 billion, in an effort to support its shift from wine and spirits, to craft beer and cannabis.

According to the report, while wine sales are still the majority of its business, Constellation is looking to sell off its less popular assets, some of which are Clos Du Bois, Arbor Mist, and Cooks. The higher end wines like Robert Mondavi are not being included in the deal.

In recent years, wine sales have slumped in the U.S., signaling a shift in preference by the younger generation. It is also clear that craft beer and cannabis are here to stay (Constellation Brands Invests Heavily in Cannabis Industry).

When reached for comment, a spokesman for Constellation brands made the following statement:

“While we don’t comment on rumors/speculation, what I can say is consistent with what we said on our earnings call on Oct. 4. We continue to focus on driving growth organically, and through acquisition and innovation at the higher end of our wine and spirits portfolio, which has consistently grown 3-4 times the U.S. market rate.

We are also considering a variety of potential actions to optimize value at the low end of our portfolio, so we can direct our growth efforts and investment dollars more fully towards our focus brands.”

Constellation Brands began as a small wine producer in New York in 1945, but found massive success after it acquired the U.S. distribution rights to Corona and Modelo from AB InBev in 2013. Imported beers have soared in popularity in recent years, which has bolstered the brands sales, as domestic beer and wine lose significant market share every quarter.

After its $3.8 billion dollar investment in Canopy Growth (38% stake), and now this divesting of its wine portfolio, it is clear that the family owned business intends on moving into the nascent marijuana industry at full speed.